BusinessCompany NewsVodafone in £18bn tax losses claim

Vodafone in £18bn tax losses claim

Telecoms company could attract fresh criticism over huge tax claim

Vodafone in £18bn tax losses claim

VODAFONE could attract fresh controversy over its tax affairs after it emerged it has claimed £17.67bn in tax losses.

The bulk of the figure – £15.83bn – comes from its Luxembourger subsidiary, and the remainder from Germany and has been triggered by its £84bn sale of its 45% stake in America’s Verizon Wireless.

The change in its structure resulting from the sale meant the accounting rules require a value to be put down on its balance sheet, the company said.

Despite that, the move could draw fresh criticism given controversies surrounding the company’s tax affairs in recent years, particularly channelling revenues offshore to low-tax Luxembourg and paying no corporation tax in the UK for the last two years.

In a statement, Vodafone said the decision would “not change the amount of tax we pay in cash anywhere in the world, either now or in the future. It will in fact increase the tax charge number that appears in our accounts each year”.

The statement went on: “International accounting rules insist that we must now recognise our historic losses all in one go. These were mainly incurred on our acquisition of Mannesmann in 2001, despite the fact that these can only be utilised over many years. These are real losses suffered by our shareholders on the fall in the value of Mannesmann after we acquired it and have been disclosed to and examined by the tax authorities in a number of relevant European countries. This incidentally has no impact at all on our tax situation in the UK.

“Until now Vodafone had been recognising these losses steadily but following the agreement to sell our stake in Verizon Wireless it has become clear we now need to do this in one go.”

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